Chapter 13: 36E (page 717)
Preparing a statement of retained earnings
Kelly May Bakery, Inc. reported a prior-period adjustment in 2018. An accounting error caused net income of prior years to be overstated by
Retained earnings on December 31,2018 is $95,000
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Identifying advantages and disadvantages of a corporation
Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage.
g. Government regulation is expensive
How does cumulative preferred stock differ from non-cumulative preferred stock?
Question: Identifying sources of equity, stock issuance, and dividends
Tillman Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet at June 30, 2018:
Preferred Stock—5%, ? Par Value; 625,000 shares
authorized, 325,000 shares issued and outstanding
Paid-In Capital:
\( 1,300,000
1,350,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 2,600,000
Total Paid-In Capital 5,250,000
Retained Earnings 11,800,000
Total Stockholders’ Equity \) 17,050,000
Common Stock—$1 Par Value; 7,000,000 shares
authorized, 1,350,000 shares issued and outstanding
Requirements
1. Identify the different classes of stock that Tillman Comfort Specialists has outstanding.
Journalizing issuance of stock and preparing the stockholders’ equity section of the balance sheet
The charter of Evergreen Corporation authorizes the issuance of 900 shares of preferred stock and 1,400 shares of common stock. During a two-month period, Evergreen completed these stock-issuance transactions:
Mar. 23 Issued 230 shares of
Apr. 12 Received inventory with a market value of
17 Issued 900 shares of 5%, \)20 par value preferred stock for \(20 per share.
Requirements
2. Prepare the stockholders’ equity section of the Evergreen balance sheet as of April 30, 2018, for the transactions given in this exercise. Retained Earnings has a balance of \)73,000 at April 30, 2018
Question: Accounting for the purchase and sale of treasury stock
Discount Furniture, Inc. completed the following treasury stock transactions in 2018:
Dec. 1 Purchased 1,900 shares of the company’s
15 Sold 200 shares of the treasury stock for cash of \(8 per share.
20 Sold 1,000 shares of the treasury stock for cash of \)1 per share. (Assume the balance in Paid-In Capital from Treasury Stock Transactions on December 20 is $2,400.)
Requirements
2. How will Discount Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2018?
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